Three Things #15: Apr. 24, 2022
On taxes, politics, and things we've lost
Thing #1: Doing Your Own Taxes
When people hear that I do my own taxes, they usually call me a glutton for punishment. They ask why I’d subject myself to such torture. They assume I’m somehow masochistic. In fact, none of these is the reason I do my own taxes. But, since you asked, let me try to explain the reason.
First things first, it doesn’t take that long. A few hours, maybe one full day at worst. It’s not exactly quick and painless, but I wouldn’t describe it as torture. And it’s not useless work. It’s a really good opportunity to reflect on the previous year and do some much-needed accounting. I review all of my bank statements and credit card receipts. I tally spending, look for mistakes, and compare to the previous year. It’s work that I don’t want to do often, but that I don’t mind doing just once a year.
Secondly, I genuinely find it interesting. I don’t like math for the sake of math, but I like applied math such as accounting. A tax return is a complex program with lots of cascading dependencies and interactions: a bit like a very complex spreadsheet with a lot of macros. It’s kind of fun to explore its structure, poke holes in it, run tests (“what happens to the bottom line if I tweak this number?”), and to build a mental model of the whole thing. I’ve been doing it for so many years, I actually have a pretty solid mental model, although I doubt I could explain any of it. In the process of doing my taxes I’m always learning things that are useful as an entrepreneur and small business owner.
Thirdly, I don’t trust anyone else to get it right. I’ve worked with accountants that have made mistakes before, some of them quite large. I have my way of doing things, it works well enough for me, and I’d struggle to describe it to someone else or train them to do things my way. I also think the incentives are wrong: you pay an accountant a fixed fee to do a tax return even though one might be much more complicated than another and take much longer. Also, the accountant’s ass is not on the line if they screw up. It should be: it’s a classic principal-agent problem.
Finally, I like a challenge. The US tax code is a disgusting mess. It’s full of loopholes and contradictions and it barely works at all. The main thing it does well is to keep an army of accountants and lawyers gainfully employed. After doing this for years, I barely—barely—know how to do it, and I’m constantly reading articles and tax forms and instructions that make no sense whatsoever. It’s like the entire thing is set up in such a way as to be as inscrutable and as confusing as possible. Doing my own taxes is my way of being a “conscientious objector” and refusing to play that game. Rather than be angry about it, I channel that anger into creativity and curiosity. I like finding and creating order out of chaos. Every year I start with a mountain of paperwork and transactions, and when the order emerges, I get a strong sense of accomplishment.
I might not keep doing my own taxes forever. As life gets more complicated—marriage, homeownership, investing, childbirth, etc.—the paperwork and the burden only continues to grow. But I haven’t given up yet, and I still don’t intend to. I don’t need to run marathons or go off and meditate for a week, either. But sometimes you discover truth in extremis, and doing your own taxes in the USA in 2022 definitely feels extreme.
For more: You guessed it! Do your own taxes. Tell me how it goes.
Thing #2: Politically Naive
This week I hosted a fundraiser for a candidate who’s running for Congress in a new district this election cycle. Some friends were a bit surprised when they learned that I was hosting such an event. I think this is because of two prevailing attitudes in the crypto community: one, that in general we’re small government types who are frustrated with the existing order and don’t want to be involved in “traditional” politics; and two, that developers should keep their heads down, stay out of politics, and focus on writing code. There’s some truth to both of these ideas, but I also think they’re frustrating and a bit dangerous.
I completely understand and identify with the first sentiment. Politics, especially in this country, feels almost irreparably broken. It’s more marked by chaos, deadlock, and waste than it is by progress or the sort of creative, constructive, optimistic, “build the future”-oriented attitude that prevails in crypto circles (and that, I think, used to be a broader liberal American sentiment). The system feels so broken, the incentives so fundamentally wrong, that I don’t feel particularly compelled to participate in it at all. It’s very easy and tempting to feel that we should give up on the existing system entirely and just build a new, better system, off in our own corner. That’s sort of what crypto folks have been doing for over a decade already, and it’s led to some successes. Consider: Bitcoin, which has created more value for more people than any other crypto project, would never have existed if Satoshi had tried shopping the idea around to central banks rather than just building it in his corner, the existing system be damned.
But I think there are limits to what this naive stance can achieve. And it’s the sort of strategy only works once. It worked for Satoshi because Bitcoin was so tiny that no one was paying attention—until, suddenly, they were, and by then it was too late. Given the regulatory challenges facing contemporary crypto platforms and projects, and the increased regulatory scrutiny as crypto has begun to go mainstream, it seems naive and totally unrealistic to expect that we can continue to build quietly in the corner forever, regulations be damned.
It’s a tricky balancing act. It would be more mature, constructive, and realistic to engage meaningfully with the rest of the world, to meet people where they’re at with respect to regulation, etc. But by the same token, we shouldn’t “sell out” on the cypherpunk values and ethos that got us here. A lot of regulation is overbearing and dumb, and we also shouldn’t engage with rules that we disagree with, or that are just plain wrong. But I think it needs to be approached on a case by case basis.
In any case, a good starting point is to support reasonable, moderate candidates like Matt West (who happens to be a DeFi developer), who understand crypto and why it matters. And we should not shy away from engaging with regulators, legislators, and other leaders to educate them and to make it clear to them what we stand for and why this stuff matters. It will take time, but, in spite of some especially dumb, pernicious, misguided legislation and uninformed political bluster, I remain hopeful that the ship of state will turn slowly in the direction of reason and good. And we have a role to play in getting it there.
For more: Support Matt’s campaign, and the campaigns of other informed, pro-crypto candidates. And, if you’re so inclined, read this long, nuanced article I wrote on this subject: Autonocrats and Anthropocrats.
Thing #3: What We’ve Lost
A friend texted me the other day and asked, “Out of the blue, what are you up to tonight?” It made me really happy—not just because this person is a good friend whom I wanted to see, but also because this question is so rare. I literally can’t remember the last time someone asked me that.
When I was younger, it was a super common thing to do. Text your high school buddy, your friend who lives down the hall, your old college roommate who lives across town, and see if they feel like grabbing a drink after class or work. What could be more natural? I think I took this sort of social interaction completely for granted for a very long time.
It seems like a pretty natural, innocuous question. But reflecting on it now, I realize that a few big things have changed, and that this sort of question actually assumes a lot of things that you can’t take for granted anymore. First of all and most obviously, it assumes that you live near each other (I don’t think people hit each other up for last minute Zoom dates, but who knows, maybe some people do that). Secondly, it assumes that you’re reasonably likely to be free, and excited to come out and meet up. Thirdly, it assumes that it’s socially acceptable to invite someone out last minute, without any specific plans in mind. It seems that we can’t assume any of these things anymore.
Over time, more and more of my closest friends live quite far away from me. Of the ten or so people who come to mind when I think about going out for a beer, more than half live in other states or countries. The same is true professionally as personally: the vast majority of people I work with on a daily basis are also very far away. And many of these people are nomadic and don’t really have a home base themselves. This is probably a good thing on balance, but it means that our communities and tribes are increasingly geographically disperse, and digital by necessity.
Moreover, my calendar has gotten more and more full over time. Between every day work, business travel, and family time, I very rarely get purely social time. I’m lucky if I get to see friends once a week. I think even my local friends have mostly given up asking me to come out, and I’ve given up asking them, too. If something isn’t on my calendar a week or two ahead of time, it’s simply not going to happen. I plan so many things around my calendar: early calls, late calls, workouts, travel, etc. It’s very rare that I find myself free for an evening, with the energy to want to go out and do something spontaneously. I think this is a natural, healthy part of growing up, but it also feels like something has been lost.
When I tried to plan an in person event this past week, it really struck me what we’ve lost in all of these changes and all this “progress.” Yes, I’m fortunate enough to know many, many amazing people. Yes, I have close friends around the world, people I’d go to the ends of the earth for. Yes, we help each other out professionally, making intros and opening doors and sharing opportunities. But, at the end of the day, if you just want to have a quiet beer and catch up—or invite people out for an in-person event—whom do you call?
As for my closest professional contacts, I only see them randomly, a few times a year, on the sidelines of conferences during manic, crazy blockchain weeks halfway around the world. Those experiences are fun, but they’re not the same as routine daily interactions, or grabbing a quiet beer at the end of the week. Human relationships are built on routine interactions and down time. When we don’t get to spend down time together, we lose something intangible but vital. In the same way that a team needs lots of in-person face time to get to know one another, build trust, and work well as a team, people need down time to build trust and develop meaningful personal relationships.
It sounds like the most boomer thing to say, but it’s true: as a result of all of this moving around and digital interaction, we’ve definitely lost some social cohesion. We’ve lost a sense of community. I’ve experienced these things in the past: growing up in a small town, having a tight knit group of friends whom I saw on a daily basis in high school and college, during study abroad and various other courses and programs, during my first (traditional, in-person, desk-based) job, and in a slightly less busy, less digital era when I first moved home to New York after college. There was a brief period when life really did feel a little like Friends: I saw the same friends nearly every day, we always went to the same few places, and we shared everything with one another. Since then, those friends have taken on more responsibility at work, had kids, and scattered around the world, and it’s never been quite the same since.
I lament what we’ve lost. And I genuinely worry about the future. My kids will have more educational and professional opportunities than any generation that came before. But will they have best friends down the road that they can find on a moment’s notice, that they see every day and can get into trouble with? Can this be recreated digitally? Call me a boomer, but: I doubt it.
I wonder if the solution isn’t in person, intentional communities. But that’s a complex topic in its own right and I’ll save it for later.
For more: Reflect on how many of your close friends live nearby, and how often you see them. How does this make you feel?